Non Alcoholic Fatty Liver Disease (NAFLD) is emerging as the most common cause of chronic liver disease worldwide, probably related to the increasing incidence of obesity and type 2 diabetes. 1 Incidence of type 2 DM is increasing throughout the world, reaching levels of a pandemic in countries like India and China. 2 Only recently has liver disease been recognized as a major complication of type 2 DM with standard mortality rates for cirrhosis greater than that for cardiovascular disease. 3 The prevalence is reported higher among patients with diabetes mellitus and obesity ranging from 35% to 75% in various studies. 1 The prevalence of NAFLD is on rise in Asian countries which may be attributed to the ABSTRACT Background: Non Alcoholic Fatty Liver Disease (NAFLD) is a common liver disorder that is strongly associated with insulin resistance and Type 2 Diabetes Mellitus (T2DM). This study was designed to determine the prevalence of NAFLD among T2DM patients and to evaluate whether there is an association between NAFLD and diabetic microand macro vascular complications. Methods: In a cross-sectional design study, 120 type 2 diabetic patients were submitted to a complete clinical and laboratory evaluation and abdominal ultrasonography for NAFLD detection and grading. They were divided into fatty liver group and non-fatty liver group and various laboratory and clinical variables were compared in these two groups. Statistical analysis included bivariate tests, chi square test, univariate and multivariate logistic regression. Results: Out of 120 type 2 diabetic patients, 68 (56.66%) had fatty liver on ultrasonography. An increase in the waist circumference, BMI, systolic blood pressure, diastolic blood pressure and levels of HBA 1c , AST, ALT, Total Cholesterol, Triglycerides and a decrease in HDL was observed in the fatty liver group as compared to non-fatty liver group. NAFLD group had higher prevalence of retinopathy (67.67% vs. 17.30%, P <0.001), neuropathy (52.94% vs. 19.23%, P = 0.0002), nephropathy (83.82% vs.53.84%, P = 0.0003). The prevalence of CAD (70.58% vs. 21.11%, P <0.0001) and POVD (10.25% vs. 0%, P <0.05) was higher in NAFLD patients. All patients with severe fibrosis had raised BMI, HbA 1c and hypertension. The results of multiple logistic regression analysis showed that NAFLD was associated with BMI, HbA1c, Triglyceride and CAD. Univariate analysis showed significant association between retinopathy, neuropathy, CAD, POVD and NAFLD. Conclusion: Cognitive. The prevalence of NAFLD is higher in type 2 diabetic patients. Obesity, dysglycemia, dyslipidemia, elevated liver enzymes and coronary artery disease are seen to be significantly associated with fatty liver than non-fatty liver type 2 diabetic patients.